RAILTRACK plunged into the red today and then announced it was seeking #2 billion more of taxpayers' money.

Despite a loss of #534 million caused mainly by the huge cost of the Hatfield rail crash, the company is paying out a 26.9p dividend to its 250,000 shareholders.

Rail union Aslef described the demand for more public money as "outrageous", while environmental group Transport 2000 said the dividend payment would leave "a nasty taste in the mouth for passengers".

The Rail Passengers Council wondered "when passengers, after months of disruption, are going to see their dividend".

Railtrack also warned that although it was seeking a big improvement in the reliability of the railways, performance in 2001-02 was still likely to be around 35% worse than in 1999-2000.

And the company said the cost of the #6.3 billion upgrade of the London to Scotland West Coast main line could rise as there were "significant outstanding commercial issues to be resolved".

Any problems on the line would affect the full running of high-speed tilting trains that Sir Richard Branson's train company, Virgin Rail, is introducing and which will dramatically cut London to Scotland journey times.

There was some good news for passengers in Railtrack's announcement that it was providing an extra #100 million in compensation to train companies for post-Hatfield crash delays.

Describing the last six months as "a humbling experience", chief executive Steve Marshall said he hoped train companies would pass some of this extra money on to passengers in the form of cut-price ticket deals and improvements.

He added that "delivery not words" was the only way to rebuild the company's reputation, that delays were still higher than they should be, and that the company contained "a lot of people who are not focused enough".

He defended the paying out of the dividend, saying that the company had a lot of private investors who needed to feel important.

Mr Marshall said: "Most of our shareholders are private shareholders and it is important to give them a gesture that makes them feel important."

Railtrack explained that not taking into account its post-Hatfield costs and other exceptional costs, it had actually made a pre-tax profit of #199 million for the 12 months ending March 2001.

But the exceptional items, including about #500 million compensation to train companies, totalled #733 million, sending the company deep into the red.

In April this year, Railtrack was given an early award of #1.5 billion of public money that had been due in 2006.

Today, Mr Marshall said he would be presenting a case in summer 2002 to Rail Regulator Tom Winsor for a further #2 billion from the public purse.

Asked how such a demand by a private company could be justified, Mr Marshall said: "We have worked extremely hard to assess what we really think we need to spend on the network to make it safe and reliable. We have been under-investing in this network for a generation.

"It is up to us to present the case to the regulator and it's up to him to come to a decision."

Even if the #2 billion is awarded, Railtrack would still have to bridge a financial gap of about #1 billion.

Mr Marshall said the company had no detailed plan, as yet, to deal with this shortfall.

Railtrack also announced today that because of the Hatfield crash, its executive directors were foregoing performance bonuses.